What Are The Pros And Cons Of Term Insurance?

Term Insurance is one option out of many when it comes to Life Insurance. It’s never easy to have to pick and choose between them, but in the end, everyone has to settle on a plan that they believe best suits them. Many companies provide term insurance for their employees and there are many more people who seek out their own term insurance policies, but is one of the most popular plans the best?

Here are some of the advantages and disadvantages of Term Insurance:

Remember that term insurance is among the most common forms of insurance and is aptly named in that it provides life insurance for set terms that can last anywhere from one year to decades!

Pro – This has the greatest return for a minimum amount of investment. Term life insurance doesn’t involve high premiums and lots of hidden fees like some other plans. You simply buy it and renew it if you want.

Pro – Term insurance involves zero hassle and is the get it and forget about it kind of policy that makes it easy and carefree.

Pro – It’s also one of the cheapest plans to buy, making it an affordable choice for many.

Pro – Term insurance isn’t front-loaded like many permanent plans. This means that the premium will always be the same for the term and won’t tax a person’s budget during those first few years with massive payments!

Pro – There’s no long-term commitment with term insurance as it will expire at some point in the future at which time one can choose to renew it or simply end the term without any penalties.

Pro – The other advantage of term insurance policies is their flexibility. A person has many different options to choose from with term insurance with the option of taking twenty, ten, five, and even just one-year contracts.

Con – Renewals can limit coverage. At the end of a term for insurance, renewing it may not always be automatic, especially as a person ages. The older a person gets, the more likely life insurance companies are to add clauses to the policy, limit coverage, or increase premiums.

Con – The biggest drawback to term life insurance is that it usually provides limited coverage. This form of coverage can be limited to death benefits only in certain circumstances.

Con – It doesn’t accrue funds. These term insurance plans offer no dividends to the keeper and can’t be cashed out because they don’t actually accrue any real cash because the person usually outlives the term of the contract.

Con – It’s taxable. Other forms of life insurance have considerably more protection from taxes, whereas term insurance is taxable right from the get-go. This means that every dollar they pay into the plan ends up being reduced a little come tax time.

Overall the benefits to term insurance are that people who simply need to take care of their family, just-in-case, can get this insurance as a basic emergency fund should anything happen to them, but that’s about the limits of what it does.


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